$84.6mln not enough to cushion virus impact on Jordan's hard-hit sectors - experts

General budget deficit stands at $2.89bln according to the draft law on the 2021 budget

  
Image used for illustrative purpose. Madaba is a small town south of the capital Amman, which was established in the late 19th century by Christians fleeing the town of Karak.

Image used for illustrative purpose. Madaba is a small town south of the capital Amman, which was established in the late 19th century by Christians fleeing the town of Karak.

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AMMAN — A total of JD60 million have been allocated to support sectors damaged by the coronavirus crisis, said Director General of the General Budget Department Majdi Al Shuraiqi.

In an interview with Al Mamlaka TV, Al Shuraiqi said that another JD52 million have been allocated to stimulate investment, of which JD27 million are destined to the industrial sector, as well as small- and medium-sized industries.

He also noted that the general budget deficit stands at JD2.05 billion according to the draft law on the 2021 budget.

The government’s general revenues in 2021 are expected to stand at JD7.875 billion, more than JD5.390 billion of which will come from taxes, Minister of Finance Mohamad Al-Ississ announced in a press conference on Monday, noting that crackdowns on tax evasion are expected to recover JD164 million.

Commenting on the figures, economist Wajdi Makhamreh said that the government expects a 2.5 per cent growth in the economy during 2021, which he said “seems inaccurate as sectors need a lot of time to recover from the coronavirus crisis.”

“There are millions of dinars in losses in around 40 sectors, which shows how a larger figure needs to be allocated, because the sum should not just make up for losses, but also provide incentives and the capability to recover. The amount allocated is very low and needs to be reconsidered,” Makhamreh said in a phone interview.

In regard to the deficit, Makhamreh said the means to fill the gap need to be announced, whether it is through a new loan or by cracking down on tax evasion. Otherwise, the more it increases against the gross domestic product (GDP), the more it will negatively affect the Kingdom’s credit rating by different agencies.

“Some of the standards the government projected might not manifest, and this could create issues in the budget, which is why the finance minister said that every three months, the priorities will be changed according to the updates,” the economist said, noting that companies, especially those who export, need support, and funds must be created to help small- and medium-sized enterprises.

“There are tens of hard-hit and impacted sectors, many of which have not had any income or revenue since March due to the defence orders, for example the event management sector or the tourism sector,” President of the Amman Chamber of Commerce Khalil Haj Tawfiq told The Jordan Times on Tuesday over the phone.

Tawfiq said that JD60 million is not enough: Neither to cover the minimum losses of even a few sectors, nor to ensure their sustainability and continuity, as sectors need a lot of time to recover.

“We expected that there will be a different view on the damaged sectors, with programmes that create actual impact, but the figure came as a bit of a shock, as it is very small,” he noted.

President of the Amman Chamber of Industry Fathi Jaghbir said that “while it is still unclear how the JD52 million for investment and industry will be spent, what matters is working on smoothing procedures and measures”.

“It is better to have something rather than nothing, but in the industrial sector, the matter is not financial support as much as it is about simplifying measures, activating the principle of reciprocity, improving the quality of the local produce and creating partnerships,” Jaghbir said.

He noted that supporting exports is “definitely a right in every country”.

“A part of the industrial sector was damaged due to the pandemic while there are others that have not been impacted at all, such as the medicine industry,” Jaghbir said.

“Industries in Jordan not only rival each other, but also compete with the world, and so it is important to support the energy bills and exports, to improve the competitiveness of Jordanian industries compared with those elsewhere in the world,” Jaghbir said.

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